Bank Lending Networks, Experience, Reputation and Borrowing Costs

32 Pages Posted: 20 May 2011

See all articles by Christophe J. Godlewski

Christophe J. Godlewski

University of Strasbourg - Faculty of Law and Business; EM Strasbourg Business School; LaRGE Research Center

Bulat Sanditov

Maastricht University

Thierry Burger-Helmchen

University of Strasbourg - Faculty of Economics and Management; University of Strasbourg - Bureau of Economic Theory and Application (BETA)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2010

Abstract

We investigate the network structure of syndicated lending markets and evaluate the impact of lenders’ network centrality, considered as measures of their experience and reputation, on borrowing costs. We show that the market for syndicated loans is a, “small world,” characterized by large local density and short social distances between lenders. Such a network structure allows for better information and resources flows between banks thus enhancing their social capital. We then show that lenders’ experience and reputation play a significant role in reducing loan spreads and thus increasing borrower’s wealth.

Keywords: agency costs, bank syndicate, experience, loan syndication, reputation, small world, social network analysis

JEL Classification: G21, G24, L14

Suggested Citation

Godlewski, Christophe J. and Sanditov, Bulat and Burger-Helmchen, Thierry, Bank Lending Networks, Experience, Reputation and Borrowing Costs (October 2010). International Conference of the French Finance Association (AFFI), 11-13 May 2011. Available at SSRN: https://ssrn.com/abstract=1833431 or http://dx.doi.org/10.2139/ssrn.1833431

Christophe J. Godlewski (Contact Author)

University of Strasbourg - Faculty of Law and Business ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

EM Strasbourg Business School ( email )

61 Avenue de la Forêt Noire
Strasbourg, 67000
France

HOME PAGE: http://www.em-strasbourg.eu/

LaRGE Research Center ( email )

1 place d'Athènes
Strasbourg, 67000
France

HOME PAGE: http://droit.unistra.fr/

Bulat Sanditov

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Thierry Burger-Helmchen

University of Strasbourg - Faculty of Economics and Management ( email )

Strasbourg
61 avenue de la Foret Noire
67085 Strasbourg
France

University of Strasbourg - Bureau of Economic Theory and Application (BETA) ( email )

France

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